How Do You Use the Tax Calculator?


Quick Answer

The IRS withholding calculator helps taxpayers determine how much to have withheld from each pay check. To use the calculator, taxpayers need current pay stubs and a recent federal income tax return, according to the IRS.

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How Do You Use the Tax Calculator?
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Full Answer

The IRS withholds taxes based on a calculation that considers the number of household dependents and the total household income, as the IRS states. Higher tax rate brackets apply to households with few dependents and limited personal deductions to offset income. Completing a W-4 form allows employees to determine how many dependent deductions are permitted for their household.

The withholding calculator uses questions about federal filing status, dependents and other characteristics to determine the total to be withheld from each paycheck. Age, disability, job characteristics and the number of children and dependents qualifying for the Care Credit may also impact withheld taxes, as the IRS claims. The IRS recommends using the calculator whenever a change in job or family circumstances occurs, to see if the change impacts taxes owed. Using the calculator helps the taxpayer avoid withholding the wrong amount. The IRS suggests using other methods to calculate taxes owed if the taxpayer is likely to owe self-employment taxes or the alternative minimum tax.

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